The Securities and Exchange Commission, which failed to stop Bernard Madoff’s long-running investment fraud despite repeated warnings, has disciplined eight agency employees over their handling of the matter but did not fire anyone.

The SEC’s head of human resources and a law firm hired to advise the agency had recommended that SEC Chairman Mary L. Schapiro fire one person, whom the SEC described as a manager in the office that inspects investment firms.

But the chairman decided not to fire the employee, because doing so “would harm the agency’s work,” SEC spokesman John Nester said.

The disclosure that no one was terminated comes at a time when street protesters and other critics who blame Wall Street for the country’s economic plight are questioning whether the government is serious about holding powerful wrongdoers accountable. This week, a federal judge excoriated the SEC for letting firms such as Citigroup settle fraud charges without admitting or denying wrongdoing.

In summary, Bernie Madoff operated, under the watchful gaze of the SEC, a Ponzi scheme that led to the largest financial fraud in U.S. history. To make amends for their failure to recognize and prevent such fraud, the SEC has disciplined seven people and fired none.

The punishments given the SEC employees varied and included suspensions, pay cuts and demotions.

The employee recommended for termination received one of the more severe penalties, a 30-day suspension along with a reduction in pay and grade. Another was given a pay cut of 5.7 percent. At the low end, one employee was suspended for seven days, another for three days and two others were issued counseling memos, a step below a reprimand.

Whether or not the SEC had to tools to prevent the reckless financial activities that led to the collapse of Lehman, or of Madoff’s Ponzi scheme, is a fair question. Whether or not they used the tools they did have available is also fair game, and here the SEC usually fails. Too often they have proven themselves either unwilling or unable to carry out their duties.

Herein lies one problem with government failure. When the markets fail, the call is for more government. When the government fails, the call is for more government. The result is a slow but consistent march of government into our lives. The secondary and tertiary results are both great and unforeseen. The incompetence at the SEC will certainly continue, and if OWS looks for accountability in DC in addition to Wall Street, they won’t find it.

A few years ago, Joe Therrien, a graduate of the NYC Teaching Fellows program, was working as a full-time drama teacher at a public elementary school in New York City. Frustrated by huge class sizes, sparse resources and a disorganized bureaucracy, he set off to the University of Connecticut to get an MFA in his passion—puppetry. Three years and $35,000 in student loans later, he emerged with degree in hand, and because puppeteers aren’t exactly in high demand…he’s working at his old school as a full-time “substitute”…[earning less than he did before].

…Like a lot of the young protesters who have flocked to Occupy Wall Street, Joe had thought that hard work and education would bring, if not class mobility, at least a measure of security…But the past decade of stagnant wages for the 99 percent and million-dollar bonuses for the 1 percent has awakened the kids of the middle class to a national nightmare: the dream that coaxed their parents to meet the demands of work, school, mortgage payments and tuition bills is shattered.

This is fairly uncommon example of wasted educational dollars – puppetry should replace basketweaving in our standard example of a useless college major – but offers a salient point: not all education is worth the price. In fact, the price of education has outpaced inflation due to both government subsidies for education and our mistaken belief that if some education is good, more must be better. That is not always true. We believe that if college is good for some, then it must be good for all. While the average college graduate makes more lifetime earnings than one with a high school degree alone, that scale may be tipping. And it should. (China is having the same problem.)

If the average college student was studying the works of classical Greece, the literature of the Western Canon, hard sciences like chemistry and physics, and advanced mathematics, the argument for more college for more students would be a strong one. But that is not the average college experience, which is usually associated with alcohol, drugs, sex, “finding yourself,” and classes slightly more rigorous than puppetry but a far cry from the rigor of an engineering curriculum. $200,000 to learn electrical engineering is a sound investment, if it is learned well. But $150,000 for a degree in sociology or “critical theory” (which for the un-indoctrinated is Marxism)?

When talking heads speak of how the rise of China and India’s educated classes will challenge our international and economic strength, they are not referring to China’s production of 24-year-olds with MAs in education or, to take the five examples Time used for their article on student debt, “I Owe U,” specialized studies, multimedia design, English, history, and global studies. China and India may overtake us, however, if they take the lead in educating top-rate engineers, scientists, and those with degrees in technical fields. This is not to deny the value of English, history or specializations – wait, what exactly is “specialized studies?” – but rather the returns on those investments, for an individual or society, will not be the same as a degree in biochemistry or chemical engineering.

A letter to the editor at Time put it this way:

Of the five young adults featured with large portraits in your article, there was not one with a major in science or math. Specialized studies, multimedia design, English, history and global studies? Give me a small break. Nothing wrong with an interest in these areas, but it’s pretty predictable that the people who major in them are unemployed or underemployed.

Three additional notes on higher education. 1, the myth of Chinese and Indian engineers overtaking us is just that, a myth. 2, We have the best technical graduate schools in the world… that do a fine job of educating foreigners. Those foreigners are often sent back home in what has been called a “reverse brain drain.” They should be allowed and encouraged to stay. 3, Charles Murray has argued for more education, which is different from more schooling.

“Nearly everyone needs more education after high school,” Mr. Murray said. “What they don’t need is to chase after this fraudulent, destructive, antediluvian thing called a B.A. The B.A. is really the work of the devil.”

The source of the quotation on puppetry was The Nation via Alex Tabarrok at Marginal Revolution. His comments are worth reading.

And for the record, my MA is in economics – somewhere between global studies and engineering in both rigor and value. As a financial decision, grad school was, as of now, not worth the money. Besides two years lost wages and the price of tuition, I returned to the job market at a lower salary then when I left due to a career change. I value the education I received though, which is more important to me than the money. It was an individual decision though, not one made because I felt I had to get an MA. Thus I have no right to complain about my “crushing” student loan payments.

If you were an employer, would you want to hire an Occupy Wall Street protester? Probably not. In fact, it’s hard to imagine an employer seeing a protester on TV, then thinking, “I’ve got to hire him!” Protesters are arguably showing off some traits that employers value, like IQ, initiative, teamwork, and determination. But they are also showing off many traits that employers avoid: A can’t-do attitude, eagerness to blame others, non-conformity, and defiance.

These observations would presumably annoy, even outrage, the typical protester. They might complain that employers’ stereotypes about protesters are unfair. But I suspect that protesters more likely to concede the facts, then attack employers’ preferences: “How dare employers expect deference! Who do they think they are?”

Two question for protesters:
1. If you were an employer, would you hire someone like you?
2. Really?

Here is a fact that you might not have heard from the Occupy Wall Street crowd: The incomes at the top of the income distribution have fallen substantially over the past few years.
According to the most recent IRS data, between 2007 and 2009, the 99th percentile income (AGI, not inflation-adjusted) fell from $410,096 to $343,927. The 99.9th percentile income fell from $2,155,365 to $1,432,890. During the same period, median income fell from $32,879 to $32,396.
These recent numbers illustrate the broader phenomenon, discussed in this paper, that high-income households have riskier-than-average incomes.